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When is it a business?

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  • When is it a business?

    I have only sold a few bits here and there to friends and family.

    Do you have to become self employed ect to sell on Folks and Etsy?

    When does it have to become a business?

    Its all new to me. Thanks.

  • #2
    Hi. I was told as soon as you make a sale, you should advise the inland revenue. They take you through the process.

    The one thing you don't want is to have someone advise them on your behalf!

    I too sold to friends and then one so called "friend" started asking about paying tax and whether I had informed the inland revenue.

    It's not too bad or painful....honest.

    Good luck and heres to many more sales. x


    • #3
      I am not sure about the rules and regulations regarding Folksy & Etsy but with regards to registering as self employed, you need to do this with HMRC within 3 months of making your first sale. (There is a possibility that this 3 month 'grace period' has been reduced now so I would do it straight away just to be sure).

      It is irrelevant whether you make a profit or not, it is the selling that counts.

      There are lots of posts on here about becoming self employed so if you do a search it should bring them up for you to look through. I know there are quite a few members who have also been on some of the free courses run by HMRC so it would be worth finding out if there are any of those in your area too.

      Good luck with your new business.
      Ali x

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      • #4
        Hi Tegan,
        when you register as self employed you'll be invited to a course (unless the government plans to cut them but surely that would be against theit interests). Do go. They are very informative and calm you down.

        If you were a tax man searching for evil tax dodgers would you not think of trawling sites like Estsy and Folksy to see if all the sellers were registered? (Personally I wouldn't, I'd be going after the big tax dodger, but hey ho, little ones are easier to catch.) Worst case senario for not registering - you get fined £100 and asked to pay whatever the tax man dreams up he thinks you owe. So why not register, do things properly? If you make pots of money and have to pay tax you can have a golden glow of keeping the hospitals running, if you make a loss the taxman gives you money back (that's assuming you have a day job.).
        Win win!


        • #5
          As soon as you accept money, even without a profit, you are a business and should be registered, as said before not difficult. The rules in the UK apply to any selling sites even ebay unless it is your own second hand goods you are selling like at a boot sale, that is different but to sell something new ie in your case made you are in bsuiness.

          As said before you don't want someone else to tell the HMRC what you are doing


          • #6
            I became self employed 2 years ago and it was easy! Search for self employed on the direct gov website and there's a form on their to fill in. Keep reciepts for any materials you buy, theoretically you should be able to claim mileage at 40p per mile if you have to drive to go and collect stock (materials for what you make) or deliver item. I April you'll receive your SA form, you just need to put down your PAYE earnings if you're in employment as well and then your income and outgoings from your self employed work. If you're employed as well that will more than likely take you over the Tax threshold so you will have to pay tax on any profits you make from you self employed work.

            It sound complicated but I promise, it's not, It's definitely worth doing now at the beginning otherwise you may come unstuck further down the line. Also have you tried contacting you local council council regarding grants? I did and got a £500 business enterprise grant for starting up my own business. it might be worth a phone call.

            Good luck!



            • #7
              So what about all the people who sell fruit and veg they have grown in their garden?

              Is it the same for them to?

              But there are so many people making and selling...are they all self employed and all that?
              Last edited by Tegan L; 19-03-2011, 12:12 AM.


              • #8
                Yup, it's the same for them. They should all register and declare the income. Whether they do or not is a different matter.

                It only takes the tax man to walk into a fair for checks, or to pick your website/folksy site or a disgruntled stall holder or customer to grass ou in for you to get caught. It's not worth it. Honestly, it's a simple process and the accounts for a very small business like a lot of us are are very easy.
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                • #9
                  Ok I have removed online things.
                  But what if Im not success full at selling any thing? What then?


                  • #10
                    Mr Taxman is bothered whether or not you make a profit, but as stated above you should register.

                    If you don't sell anything, and you have a "day job" you may be able to offset some of your loss against your income - speak with your local office, they are human and really very helpful.

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                    • #11
                      Dont have a "day job" at the mo. So not earning anything.

                      I didnt say if I make a profit I said if I dont sell a thing.... zero money.... Does tax man still want money?

                      Prety much every one and their uncle are making things to sell so its a tough market.

                      Is It Really Worth It??


                      • #12
                        Originally posted by Tegan L View Post
                        Dont have a "day job" at the mo. So not earning anything.

                        I didnt say if I make a profit I said if I dont sell a thing.... zero money.... Does tax man still want money?
                        If you don't sell anything, even though you have spent out on materials etc, you will have made a loss, which can be carried over to next year.

                        Mr Taxman will want some money. once your profit is over your tax free allowance, as most businesses do not make a profit in the first few years then no tax will be paid, although returns have to be submitted.

                        Twitter JUSTSOAPS
                        Natural Handmade Olive Oil Soaps and Skincare free from SLS, Parabens, and other Nasties


                        • #13
                          Jane has given you sound advice, does not amter whether you make money or not you are selling so a business and must register with the tax office, far better than being caught.

                          As this was also posted on an open forum any words can be picked up by google can be directed to the thread and the tax office do trawl and look for this type of question along with visiting craft fairs, I have been at such a fair where someone had to close up shop part way through and claimed only a hobby!

                          Is it worth it? how serious are you about what you do? if you are passionate about your craft then yes every effort is worth it to attempt to make it succeed, if it is just a hobby then make and give away as gifts but not sell.

                          This is all I do sometimes times are very hard (like now) but at the end of the day this is my passion and I love working for myself, have not had a holiday for 12 years but who cares when you can get up and do what you want for the day, take a day off if you want, work your day around a friends visit, pop out to the shops when you want, not be beholden to red tape and two faced managers, you get the picture......


                          • #14
                            I saw an example on a website a couple of years ago - think it was the Direct Gov one but I can't be sure. It gave as an example a woman who made cushions, which she sold to her family to cover the costs of materials. Her husband then took some of her cushions into his office to sell to his colleagues and at that point she was deemed to be in business, had to register as self employed, complete a tax return, etc etc. The clincher was that the potential customers were outside of her family - ie the public.
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                            • #15
                              Originally posted by Tegan L View Post
                              I didnt say if I make a profit I said if I dont sell a thing.... zero money.... Does tax man still want money?
                              No he'll only want money if you make over a certain amount (think it's around the £5000 mark give or take a thousand) so up until that amount everything you earn is completely yours. He will still want you to fill in the forms every year but it's not too much hassle and a small price to pay for being able to sell your work legally.
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